Weather the parent actually claims the student if they qualify to claim them, or doesn't claim them really doesn't weigh in here. The key word is "QUALIFY'. Does the parent "qualify" to claim the student? That is the question.
First, who claims the student as a dependent?
If the student:
Is under the age of 24 on Dec 31 of the tax year and:
Is enrolled in an undergraduate program at an accredited institution and:
Is enrolled as a full time student for any one academic semester that begins during the tax year, (each institution has their own definition of a full time student) and:
the STUDENT did NOT provide more that 50% of the STUDENT’S support (scholarships/grants/529 distributions received by the student ***do not count*** as the student providing their own support)
Then:
The parents qualify to claim the student as a dependent on the parent's tax return . Period, End of Story. But one thing I want to point out here. The parents *QUALIFY* to claim the student. The parents are *NOT* required to claim the student as a dependent. But even if they don’t, since they *qualify* to claim the student, then if the student will be filing their own tax return the student is *REQUIRED* to select the option for “I can be claimed on someone else’s return”. To reiterate:
If the student qualifies to be claimed on the parent’s tax return, then the student can not take the self-exemption on their own tax return, no …matter…what.
So basically, the parents have a choice. The student does not.
There are only two possible ways the student can provide more than half of their own support.
1) The student has earned income from self-employed or has a W-2 job and made sufficient income during the tax year to justify a claim to providing more than half of their support. Additionally, the earned income must exceed the total amount of all other 3rd party income received during the tax year, such as scholarships, grants, 529 distributions, gifts from Aunt Mary, money from mom and dad, etc.
2) The student is the "primary" borrower on a qualified student loan and sufficient funds were distributed to the student during the tax year to justify a claim to providing more than half of their own support. Additionally, the money distributed during the tax year must exceed the total amount of all other 3rd party income received during the tax year, such as scholarships, grants, 529 distributions, gifts from Aunt Mary, money from mom and dad, etc.
